Mr. STEWART:

He would have to prove that the farmer was in default deliberately, that he was able to do something; and he would have to prove it, which would be something entirely beyond his knowledge. You are putting upon him an onus, under this section, that I submit should be upon the farmer, the man for whose benefit all these proceedings are devised, the man who gets the benefit of this legislation. Here you reverse the whole procedure and place upon the creditor the burden of getting what the court has said was his right. You are really putting the cart before the horse. I submit that the whole procedure is wrong; it is contrary to the principles of the act itself and contrary to justice. It is not fair. This section should be redrafted in such.a way that the farmer, who is in default on his own proposition, is the one who must come to the court and get some readjustment or rearrangement. He should have to discharge the onus of proving what might be fair and equitable and just. Here the whole procedure is reversed, and this adds another objection to this act which I submit is worthy of consideration. I see many added difficulties, obstacles and delays in the way of a creditor getting his rights under this act. As I have said, I think this clause is drafted the wrong way about. The procedure should be quite the opposite to that laid down under this section.

Then as to subsection 2, the proposition is that he may be thrown into bankruptcy. I do not propose to deal with that just now, but if the creditor goes through all this procedure then the farmer is right back where he was before. The extension or compromise or scheme is set aside; the farmer is back where he started, and in addition to any other remedy the creditor might have, he must start all over again. This is the third round for him. The farmer has brought him in the first time. The creditor has had to bring the farmer in the second time, and now he has to start all over again. I do submit to the minister that this is putting too many obstacles in the way of the creditor. It is making it too difficult and it is increasing the hardships already manifest in the operation and administration of this act. It adds to the long delays that are

Farmers' Creditors Act

inherent in the act as drafted. In my opinion it simply encourages the dilatory man to go along and default in his arrangement or compromise in the scheme set out for him and see how long he can get away with it, how long it will be before some creditor will go through this procedure of bringing him before a judge. The onus of proof is on the creditor. It seems to me that is an unreasonable provision. I contend that in this extension we are providing another strong argument for the repeal of this act as soon as possible, at least in Ontario. I am sure the operation of this act under these expanded and amended provisions will create a deep sense of injustice. They will cause delays and add expense to the proceedings. I submit that the section has been drafted on the wrong basis.

Mr. DUNNING:

The remarks of the hon. member for Leeds (Mr. Stewart) illustrate better than anything else the difficulty of dealing with this kind of legislation. As a matter of fact the complaints with respect to the section in the original act which this amendment is proposed to replace came entirely from creditors. The draft now before the committee appeared first in votes and proceedings and later in the reprinted bill. Because of its appearance in the reprinted bill it became public and I have received from creditors nothing but commendation. I must confess that my hon. friend makes out a pretty good case that this proposed amendment would cause further injustice to creditors. I believe he used an expression of that kind. If that is the view of the committee I am quite prepared to drop this amendment.

It is a sincere effort to meet complaints received from creditors generally regarding the operation of the present subsection 3 of section 2. This amendment was designed to provide effective machinery for dealing with the dishonest farmer. There is not an hon. member who wants to protect the dishonest farmer, but every one of us wants to see the honest farmer who is paying according to his ability get as fair a chance as possible under the legislation, subject to judicial decision as to the circumstances of the particular case. I repeat what I said yesterday that we in the house cannot undertake to make judicial decisions with respect to particular cases; we can only put in the law such provisions as enable a judge, taking into account all the circumstances, to render a decision fair to both parties in the case.

The power proposed to be granted by this amendment will be in addition to such remedies as the creditor would have normally under provincial legislation, to enable him

to bring the dishonest debtor into court and to get from the court a decision that by reason of the dishonesty of the debtor, the debtor should be put back in the position he occupied before the order of the board of review was issued. I am in the hands of the committee and I should like to have a full discussion on the matter. As far as the government is concerned we are not insisting on this amendment, but we believe it to be fair having regard to all the circumstances.

Mr. STEWART:

If a compromise, an

arrangement or a composition is not carried out, all the creditor has to do is go to a judge and get permission to proceed.

Mr. DUNNING:

That will be found in subsection 3 of section 2.

Mr. STEWART:

That power is there

already.

Mr. DUNNING:

My hon. friend missed the point. The creditors claim that the power there now is not good and that the power proposed by the amendment is good. My hon. friend takes the opposite position. He says that the remedy in the present law is good while that proposed in the amendment is not good.

Mr. STEWART:

I did not say that. I say that he has a remedy now and that this appears to be an alternative.

Mr. DUNNING:

Not an alternative, an additional right. The present remedy reads:

In any case where the affairs of a farmer have been arranged by a proposal approved by the court or confirmed by the board as hereinafter provided, part I of the Bankruptcy Act shall notwithstanding section seven thereof thereafter apply to such farmer but only failure on the part of such farmer to carry out any of the terms of the proposal shall be deemed to be an act of bankruptcy. Provided that such failure shall not be deemed an act of bankruptcy if, in the opinion of the court, such act was due to causes beyond the control of such farmer.

As a layman, that appeared to me to be fairly clear but lawyers and creditors tell me that it has been virtually impossible to get a decision under that section, particularly in some provinces. In certain provinces decisions such as are contemplated by the amended section have been rendered, but in many provinces the complaint has been that no decision could be obtained favourable to a creditor in the case of a dishonest fanner. My hon. friend as a lawyer can read the two sections side by side. He can read, as I have, the judicial decisions both ways, and

Farmers' Creditors Act

I think he will agree that at least some clarification is required in order to have some uniformity in the decisions.

Mr. STEWART: I think the minister

has missed my point to a certain extent. My contention is that where a farmer who has an extension or a compromise fails to carry it out, then the creditor ought to have his rights restored and be placed in the position of being able to proceed as if the order had not been made. _

Mr. DUNNING: Automatically?Mr. STEWART: Or on application tothe court. The farmer should know whether he wishes an extension and whether he expects to be able to carry out its provisions. If he does not go to the court and get an extension, then the creditor has the right to proceed. His rights are revived and reinstated because of the default. Under this proceeding, the onus is put upon the creditor and I contend that that is an undue onus. I am simply contending that the creditor should have certain rights and if the farmer wishes to postpone the granting of those rights, it should be up to him to make further application.Mr DUNNING: The law as it now

stands places the onus on the creditor. The creditor must go to court in order to demonstrate that part I of the Bankruptcy Act-

Mr. STEWART:

All he has to do is

demonstrate that there has been default.

Mr. DUNNING:

He has to demonstrate

something else; he has to demonstrate that the default is due to causes beyond the control of the farmer. Let me read the existing section in part:

. . . provided, part I of the Bankruptcy Act shall notwithstanding section seven thereof thereafter apply to such farmer but only failure on the part of such farmer to carry out any of the terms of the proposal shall be deemed to be an act of bankruptcy. Provided that such failure shall not be deemed an act of bankruptcy if, in the opinion of the court, such act was due to causes beyond the control of such farmer.

Therefore the creditor to-day must initiate proceedings and take the farmer into court in order to prove that the failure to carry out the terms of the compromise was due to causes within the farmer's control.

Mr. STEWART:

If he wishes to take him into bankruptcy, he may do so. But he does not wish to take him into bankruptcy- That is the last thing he wishes to do-and he should be at liberty to proceed for recovery in his own way.

Mr. DUNNING:

He must do it in accordance with the provincial law of contract.

Mr. STEWART:

No, not in bankruptcy.

Mr. GLEN:

I hope my hon. friend from Leeds (Mr. Stewart) is not correct in his contention, because this clause in the bill was inserted, as I thought, because of the argument I made in the discussion of the 18th of March. If my hon. friend is right in saying this is not what I want, then I do not know what I want. What I want is an additional remedy for the creditor in the case of a dishonest debtor. I know that the board of review in Manitoba take this position, that they have made a new contract following the old contract on which the application was made, and that that new contract is subject to the provincial law, and in the case of default in carrying out the terms of the order of the board of review the creditor has the remedy of going to court and taking foreclosure proceedings, depending on the state of his security. In addition to that, the courts have held that the rules do not apply so far as the proposal before the board of review is concerned, after the order has been made, and the creditor is left in the air; he has no remedy at all. But this new section gives the creditor an additional right to what he already has under the provincial law. It gives him an opportunity in an inexpensive way to make an application to the court, which in Manitoba is the county court; the creditor can apply to the county court for cancellation of the proposal. If he has to take foreclosure action on the board of review's order all he has to prove is default, and the farmer in defence would have to show that the default was caused not by his own act but by causes beyond his control. That is exactly the position we are in to-day. But this gives the additional remedy not of taking foreclosure proceedings but of going to the ordinary county court and there making a demand for cancellation because of the dishonesty of the farmer debtor.

I hope my learned and hon. friend will see that this provision should not be taken out. It is a serious matter in Manitoba, and I am quite sure in Ontario, and we want this remedy as against the dishonest debtor. In the case where cancellation takes place it means that you go back to the original debt and the order of the board of review reducing the value of the land, and the farmer debtor will then be in the position he was in before.

Mr. STEWART:

I think that ought to take place automatically where the farmer makes default unless he himself institutes proceedings and gets an extension. That is what I am contending for.

Farmers' Creditors Act

Mr. ROBICHAUD:

While I would not wish to see the section dropped, I am inclined to agree with the member for Leeds (Mr. Stewart) that the onus should not be put on the creditor to show that the farmer defaulted through his own fault. I think the onus should be on the man who is looking for the favour. If you added a few words or changed the phraseology of one line I think it would meet the situation. I suggest that after the word "aforesaid" in line 4 the words be inserted, "unless the farmer satisfies the board that such default was due to causes beyond his control." Instead of putting it negatively, put it affirmatively, so that unless the farmer can satisfy the court that such default was due to causes beyond his control, the court may annul.

Mr. LAWSON:

Sometimes when too many lawyers get into a discussion it is said that it creates confusion worse confounded, but in view of the remarks of the minister as to the meaning of the present law on the statute book, and at the risk of creating further confusion, I should like to point out what I conceive to be the difference and what I think is the issue now, if I may so describe it, between the 'hon. member for Leeds and the Minister of Finance.

In the present act, as I understand it as read by the minister, because of the phraseology of the section the onus is upon the creditor.

Mr. DUNNING:

At the present time?

Mr. LAWSON:

Not at the present time. Because of the way this new section is phrased, I think it does impose that onus upon the applicant, who of necessity under this section must be the creditor.

Mr. DUNNING:

If my hon. friend will permit me, the complaint of creditors to-day is that that is just the position the present section puts them in, and they have had from various judges in the provinces ample warrant for that statement.